Jersey is looking to tempt the super rich to move to the island with a promise of some of the lowest taxes in the world mixed with other financial incentives like QROPS offshore pensions.
The government is making a play to become the home of 15 tax exiles every year by offering attractive low rates on worldwide annual income of more than £625,000 (US$1 million).
Treasury Minister Philip Ozouf intends to drop income tax rates to 20% on the first £625,000 of worldwide earnings and just 1% on the rest – down from 20% on the first £1 million and 1% on any other income.
These super rich ex pats will have to pay a minimum £125,000 income tax per year and a 20% rate on any income earned in Jersey.
Currently, they pay £200,000 income tax on the first £1 million, 10% on the next £500,000 and 1% on any other worldwide earnings plus 20% on any Jersey earnings.
The new tax regime will save the ex pats at least £75,000 a year in income tax.
New rules will affect tax on QROPS benefits for some
The Jersey government wants to increase cash coming in to the Channel Island – but find they have to change controversial zero-10 tax rules in line with neighbouring Guernsey.
The European Union are at odds with Jersey, Guernsey and the Isle of Man over corporation tax laws that mean local firms pay 10% tax while firms from overseas relocating on the islands pay zero.
Guernsey has already agreed to revise company tax to remove the anomaly, while Jersey and the Isle of Man are trying to hang on to the laws that other countries complain give companies an unfair trading advantage.
These tax changes will not affect the benefits of a Jersey QROPS for ex pats – but will change the income tax on any payment of benefits from a QROPS for ex pats resident in Jersey who are caught by the proposed changes.
This impacts on payments from QROPS based in any jurisdiction, as the tax is dependent on the residency status of the pension scheme member, not the residency of the QROPS pension.